Aliens: Signing James Cameron on

a)This is the guy
Giler and Hill at the time had a company called The Phoenix Company.

In the summer of 1983, Larry Wilson was a development executive working for the company, searching for other writers.

He came across a script called The Terminator and when he read it, he found it electrifying.

He put it on David Giler's desk and said "This is the guy"

Giler along with Walter Hill and Gordon Carrol read The Terminator script and were very impressed.

They wanted Cameron and Hurd to come to see them and talk.

Gale Ann Hurd meanwhile was very busy in pre-production for Terminator so Cameron went in alone.

b) Talking with Cameron
They had a project for Cameron a futuristic update of Spartacus in outer space, he was supposed to come up with his own idea to pitch, and they would pitched their idea to him but the conversation revealed that they weren't seeing eye to eye on the whole matter.

Another project that they were developing at the time was a science fiction version of The Great Escape.

What they wanted for Spartacus in space was sand and sandals elements intergalactically dressed up, still literally with swords and sandals in the movie, which Cameron found idiotic, while his own pitch involved wanting to do a fundamentally different story told in primarily science fiction term.

Se told them that it wasn't going to work, he got up to leave the meeting, but Giler insisted that he still wanted to do something with him.

Cameron asked "Are there any other projects that you might be considering"

David responded "Well, there's always the next Alien"

Curiously Cameron didn't know about who the producers of Alien were, or at least he had a brain block about the whole matter here, and his brain was like a pinball machine going off.

He responded "You guys have the rights to Alien?!?" and as far as Gale Ann Hurd knew, he continued on with the words "Alien is one of my my favourite films of all time, and I would really love to have a shot at cracking the story"

With that Cameron was hired to do a treatment for an Alien sequel

c) Outline
Cameron asked whether Brandywine had any ideas for an Alien sequel.

Giler handed him a one paragraph story outline that near enough read "Ripley gets rescued and goes back to the planet with a bunch of soldiers, They are attacked and eaten" and concluded with the sentence "And then some other bullshit happens."

He thought that this trivialised the entire process of actually working out what the story should be.

d)Transforming "Mother" into Aliens
Cameron
had written a script called Mother, set in the future. Its story took
place on the planet Venus, and concerned an off-world mining operation.

It
featured a character very much like Ripley, and had a creature that was
a sort of an alien queen that would be known as "Mother".

It
ended with a final battle between the protagonist encased in a suit
that Cameron would later in Aliens be called a power loader, and the
creature known as 'Mother'.

Meanwhile at the end, the
entire Venus-based complex where the humans were based in the story
started falling apart, with the structure being wrecked by super-heated
gases boiling up from Venus' interior, and Cameron would make this due
to the Atmosphere Processor for Aliens

e) The Treatment
Jim Cameron, when writing, would have a period of assimilation where he absorbs everything to do with the project and when everything relating to the subject.

For the Alien sequel he rad a lot of books on Vietnam because of the strong military storyline.

Then for three days he would sit and drinks perhaps 10 cups of coffee before he would write his synopsis within a week.

His earlier synopsis for Terminator ran for 45 pages, and here the Aliens synopsis was 42 pages and ended up being written within three days.

He submitted his treatment to Fox, where because of lack of support for the idea, the project went to sleep.

An executive told Cameron that he didn't like treatment because it was wall-to-wall horror and it needed character development

At one point, a deal was almost closed to see the rights to the sequel to producers Mario Kassar and Andrew Vajna ("Rambo"), but the lawyers couldn't close the deal, so the prospects looked dim.

f) Delays
By July 1984, Larry Gordon was hired to replace former studio production head Joe Wizan.

Finding few project in the production pipeline, he looked for possible sequels and came across the "Aliens" file.

He couldn't believe it hadn't already been done because in this business there were those decisions that one would agonize and sleep over, but this was so obvious to the extent it was a no-brainer.
Cameron finally made and completed his Terminator movie and released on 26th of October, 1984.

Upon seeing "The Terminator", Gordon agreed to let Cameron write and direct the script, with Gale Anne Hurd, as producer

Source Quotes

Summer, 1983
: Larry Wilson, a development executive working for the Phoenix Co.
(Giler's production company), was searching for writers for "Aliens." He
came across a script called "The Terminator" by James Cameron and
couldn't put it down. "It was electrifying," Wilson recalled. "I put the
script on David's (Giler) desk and said, 'This is the guy.' " Giler and
partners Hill and Carroll quickly agreed on Cameron, and he was hired
to do a "treatment" (a short-form version of a script that lays out the
story for a movie).(LA Times, July 24, 1986, 'Aliens': A Battle-scarred Trek Into Orbit by DAVID T. FRIENDLY)

Starburst:Did Walter Hill and David Giler come to you for the proposed Alien II based on the Terminator Script?Jim Cameron:Originally they came to me to do a futuristic updating of
Spartacus in outer space. It was through this that Alien II came up in
conversation as we weren't seeing eye to eye on Spartacus. They
basically wanted the same movie but with the sand and sandal elements
intergalactically dressed up, while I wanted to do a fundamentally
different story told in primarily science fiction terms(Aliens , The Starburst Interview with James Cameron by Alan Jones)

Indeed, by the fall of 1983, the year Cameron first talked to Giler and Hill, Brandywine was focused on developing non-Alien-related projects. one was a science-fiction version of The Great Escape (ultimately unproduced); another was a sci-fi remake of Spartacus (also never made). Yet it was precisely because of this Spartacus 'update' that Jamese Cameron had been asked to met Giler and Hill in the first place (Aliens the illustrated screenplay, p11)

James Cameron: My Terminator script had gotten a good response at Brandywine, so I was called in to pitch my idea on their Spartacus-in-space project. But it became clear that David Giler wanted a swords and sandals-type film set in outer space - with literal swords and sandals. That was a concept I found pretty idiotic. It certainly didn't jibe with the pitch I'd come up with for my own take on their remake, so I basically told them it wasn't going to work and got up to leave the meeting. But Giler insisted that he still wantd to do something with me. I asked him if he had anything specific in mind, Giler replied, "Well, there's always the next Alien". (Aliens the illustrated screenplay, p12)

James Cameron: Now, picture my brain at that moment. It was like a pinball machine going off. I hadn't known Giler had been involved with Alien. I told him, "You guys have the rights to Alien?!?"(Aliens the illustrated screenplay, p12)

Gale Anne Hurd: Walter and David have a company together called The Phoenix Company. They had a project which they wanted Jim to do - a futuristic updating of Spartacus. They had read The Terminator script and were very impressed. As I was busy putting together the pre-production on Terminator, Jim met with them, was pitched the Spartacus idea, and didn't immediately respond to it. So, he asked if there might be any other projects they were considering. Then they said, "Well , there is the sequel to Alien." Jim said "ALIEN was one of my favourite films of all time, and I would really love to have a shot at cracking the story." Because at the time, it really hadn't been cracked. No one had come up with an approach that was satisfactory to all the various creative individual involved. ( Starlog, May, 1986)

James Cameron:When I'm writing, I have a period of assimilation where I absorb everything to do with the project. I read everything related to the subject. For Aliens I read a lot of books on Vietnam because of the strong military storyline. Then for three days I sit and drink 10 cups of coffee. Then I'll write the synopsis in a week. The synopsis for Terminator ran 45 pages. The Aliens synopsis was 42 pages.(Monsterland, p24-25)

Fall, 1983 : The 42-page treatment,
written in three days, was submitted to Fox where, because of lack of
support for the idea, the project went into its own form of hyper-sleep.
Said Cameron: "An executive told me he didn't like the treatment
because it was wall-to-wall horror and it needed more character
development." At one point a deal was almost closed to sell the rights
to the sequel to producers Mario Kassar and Andrew Vanja ("Rambo") but
the lawyers couldn't close the deal. Prospects for a sequel looked dim.

July, 1984
: Independent producer Larry Gordon was hired to replace former studio
production head Joe Wizan. Finding few projects in the production
pipeline, he looked for possible sequels and came across the "Aliens"
file. "I couldn't believe it hadn't already been done," Gordon said. "In
this business there are those decisions you agonize and lose sleep
over, but this was so obvious. It was a no-brainer."Gordon, who
had worked with Walter Hill on "48 HRS.," revived the project and agreed
to let Cameron write and direct the script after seeing "The
Terminator." The deal also included Gale Anne Hurd, then Cameron's
collaborator and girlfriend, as producer.

James Cameron: Right
after my meeting with Brandywine, I pulled something out of my files
that had been inspired by Alien. I'd written it years earlier, it was
originally titled ET. But when I found out that a guy named Spielberg
was making his own movie called ET, I changed the title of my ET to
mother. And mother
already had most of the structure, characters and key scenes that would
later show up in Aliens. I didn't tell Brandywine that, though, I simply
added the character of Ripley, changed the title from Mother to Alien
II, and came back to Brandywine a week latr with a 42-page outline. (Aliens the illustrated screenplay, p12-13)

Mother, like Aliens, was set in the future. Its story took place on the planet Venus, and concerned an off-world mining operation.(Aliens the illustrated screenplay, p13)

James Cameron: But Mother also featured a character very much like Ripley, had its own type of Alien Queen, and ended with a final battle between the protagonist and 'Mother" while the main character was encased in what I'd later call a Power Loader. Also, at the end, the entire Venus-based complex where the humans were based in Mother started falling apart, just like the Atmosphere Processor dos at the end of Aliens. Except that in Mother's case, the structure was being wrecked by the super-heated gases boiling up from Venus' interior.(Aliens the illustrated screenplay, p13)

James Cameron: Alien was a watershed in science fiction film making. A truly seminal moment, in fact, along with 2001, Alien is my favourite science-fiction film.(Aliens the illustrated screenplay, p12)

After then enquiring whether Brandywine had any ideas for an Alien sequel, Cameron was handed a typed, one paragraph story outline by David Giler. (Aliens the illustrated screenplay, p12)

James Cameron: That outline said something like " Ripley gets rescued and goes back to the planet with a bunch of soldiers. They are attacked and eaten." That was pretty much it. Except that - and I'll never forget this - the outline concluded with this sentence; "And then some other bullshit happens. " Which I thought trivialised the entire process of actually working out what the story should be.(Aliens the illustrated screenplay, p12)